Canadian Dollar Weakens as October Rate Hike Expectations Ease, Corpay Says

09:49 AM EDT, 10/19/2026 (MT Newswires) -- The Canadian dollar is edging lower on Monday as traders pare back bets on an October Bank of Canada rate hike, reducing expectations for further monetary tightening and slightly widening interest-rate differentials with the US, according to Corpay Currency Research in a note. Financial markets expect the Federal Reserve to keep rates unchanged this month, followed by three rate hikes over the next year, wrote Corpay Chief Market Strategist Karl Schamotta in the note. Canada saw limited pass-through from higher energy prices last month following the release earlier Monday of the consumer price index, while underlying inflationary pressures remained broadly unchanged, said Schamotta. Overnight index swaps now price in a 65% chance of a BoC rate hike in October, down from more than 70% ahead of the CPI release, added Corpay. It remains unconvinced that near-term tightening is warranted, given the lack of demand-led inflation pressures and continued softness in the domestic economy. The BoC's Business Outlook Survey, due at 11:30 a.m. ET Monday, could further dampen rate-hike expectations and weigh on the Canadian dollar if it points to deteriorating business sentiment, said Corpay. Meanwhile, it doesn't expect this Monday's Alberta referendum to have a limited impact on the loonie, given the low level of public support for separation from Canada.